I hit it with 168 deg water, which settled to 158. I used 12.8 quarts, then used 7.5 qts and added that for the last 10 mins which was at 168. I only ended up with 4.5 gallons and the boil volume needs to be 6.5 gal. I had a total of 10.25 lbs of grain.

Your mash temp will affect the ways sugars are extracted from the grain. Generally, if you want more non-fermentables and a higher final gravity (sweeter, fuller-bodied, etc.), use a higher mash temp. If you want a drier, thinner, crisper beer with a lower final gravity, use a lower mash temp.

158 is a high mash temperature. For most of my beers, I used mash temps ranging from 149 to 156.

I know that my mash temp should be lower. What I am looking for is, is it better for how I messed up and hit it 2 times with sparge water, to use hotter, or cooler water than the actual mash temp?

Your sparge water should be hotter than your mash water. 170-180 degrees will be fine. You are trying to stop the enzyme process that happens during mashing and at the same time rinsing off sugars that are still on the grains.